Using the Taylor rule, if inflation is 1 percent, desired inflation is 2 percent, and output is 2 percentage points above potential, the Fed should target a federal funds rate of:
A)6.5.
B)4.5.
C)3.5.
D)3.0.

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The Answer of Using the Taylor rule, if inflation is 1 percent, desired inflation is 2 percent, and output is 2 percentage points above potential, the Fed should target a federal funds rate of:
A)6.5.
B)4.5.
C)3.5.
D)3.0.

Using the Taylor Rule, If Inflation Is 1 Percent, Desired